Indian gold demand weak as jewellers postpone purchases

A goldsmith holds finished gold bangles at a workshop in Kolkata January 16, 2013.
REUTERS/Rupak De Chowdhuri/Files

MUMBAI Gold demand in India, the world's biggest buyer of the metal, remained sluggish on Monday as buyers postponed purchases expecting a sharp drop in prices.

As of 1052 GMT, the most active gold contract for April delivery on the Multi Commodity Exchange (MCX) was 0.01 percent lower at 30,190 rupees per 10 grams.

"Demand is weak from local jewellers. Investment demand is also weak. Jewellery exporters are buying, but they are also cautious," said a Mumbai-based dealer with a state-run bank.

"Most jewellers are on the sidelines. They are expecting a sharp drop in prices."

The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal. It fell on Monday.

After a 50 percent import duty increase to 6 percent on January 21, the Reserve Bank of India recommended putting curbs on imports, along with launching gold-linked products to limit shipments.

The government may further raise import duties on gold or put a cap on purchases in a bid to rein in the current account deficit in the 2013/14 budget, an official with the biggest state-run gold importer MMTC said on Monday.

The silver contract for March delivery on the MCX was 0.25 percent higher at 56,204 rupees per kg.

The following were the prices of gold and silver in rupees as of 1.15 p.m. local time in the spot market, quoted by HDFC Bank.

NEW DELHI Prime Minister Narendra Modi's surprise decision to scrap high-value banknotes has upset preparations for next year's budget because of the resulting disruption to growth, revenues and asset sales, two government sources said.

BENGALURU Indian inflation is expected to have cooled to a 14-month low in November after Prime Minister Narendra Modi's surprise removal of high denomination bank notes caused an intense cash shortage and severely hurt consumption, a Reuters poll found.